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We were playing Cities and Knights at the weekend and halfway through the game realised that no one had earned the largest army card. The reason behind this was that no one knew what it was earned for. A couple of us scanned through the rule book in search of the answer, but to no avail.

Having since looked at the Wikipedia page (linked above) I see that it's the player with the most knight points, but do the knights have to be active, and is there a minimum requirement?

I find playing with new players nearly doubles the time to play Cities and Knights (two and a bit hours instead of one and a bit). Your next game is likely to be much quicker.
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Timothy JonesOct 7 '12 at 23:08

The second part of this question hints at the Defender of Catan points that are awarded, which sort of take the place of Largest Army. When the barbarians reach Catan, if the total strength of active knights equals or exceeds the total number of cities, the player with the most total strength in active knights receives one permanent VP. (If the total strength of active knights is not enough, the player with the least strength has a city sacked, downgrading it to a settlement.) See p. 11 of the rulebook.